You must label each answer with the number of question. Each question must have at least three sentence answers. There is no maximum sentence, use as many as you wish to thoroughly answer the question. All answers must be complete sentences using proper grammar and spelling.

Assume you are opening a furniture store. You have some decisions about how to do the accounting for the business.

1. Which type of inventory system will you use? Explain your reasons.

   • specific, LIFO, FIFO, or weighted average?

   • perpetual or periodic?

2. How often do you plan to do a physical count of inventory on hand? Explain your reason.

3. Inventory costs are rising. Which inventory costing method would have the effect of maximizing net income?

4. Inventory costs are rising. Which inventory costing method would have the effect of minimizing the amount of income tax?

5. What do you think will be the biggest accounting issues you will encounter with running your business?